Colorado's Public Employees' Retirement Association has a $22 billion shortfall, though that number is falling for the first time in years.
Thanks to a banner year in which its invesments yielded in a nearly 13-percent return on investments, PERA's unfunded liability dropped by more than $800 million.
State pensions across the country are facing similar funding shortfalls. A recent Standard & Poor's survey using 2011 data put Colorado's funded ratio at 64.8 percent, compared to a national average of 72.7 percent for all 50 states. That ratio takes into account state debt, pension liabilities and retiree health benefit liabilities. Colorado ranked 34th in terms of unfunded pensions.
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Despite low returns in 2010 and 2011, average gains for PERA over the last 10 years were 8.4 percent.
Executive Director Gregory W. Smith said asset allocations lead to the high returns, with 56 percent of assets in global equities, 25 percent in fixed income and 7 percent in real estate, alternative investments and investment funds. 2012 was Smith's first year at the pension's helm.
The report noted a new investment strategy enlisted in October 2012, a private equity fund with an eye toward local investment opportunities, Colorado Mile High Fund. An external advisor manages the $50 million co-investment program, which is designed to benefit both new business in Colorado and PERA.
At the end of 2012, PERA was paying benefits to more than 100,000 employees and their beneficiaries. The average benefit was $2,983 per month. PERA notes that less than 1 percent of its retirees receive pension benefits greater than $100,000. In 2012, the fund took in $1.9 billion in employer and employee contributions.
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